Sage Payments is now Paya.
It’s a new chapter for an old company in a legacy industry once known as payments processing. So, perhaps it’s fitting to begin their story with, “Once upon a time…”
In a payments landscape far, far away, maturation was a slow process. There was a single interchange rate. Then, there were two. There was little to no product differentiation – acquirers were simply in a race to snap up as many merchants as possible before the competition got there.
But that was a long time ago.
Today, material changes come quickly in this industry, forcing players to think beyond today’s business and consider tomorrow’s. Priorities like alternative payments, bitcoin mining and product differentiation have taken the spotlight. Oh, and there are over 2,000 interchange rates now.
Joe Kaplan, CEO of Paya, said in an interview with Karen Webster on Thursday (Jan. 25) that market saturation turned the race to onboard merchants into a race to the bottom: Without product differentiation, competition became about price point – specifically, who could offer the lowest one.
“I wouldn’t want to be the winner in that race,” Kaplan said.
Stage One: Saturation
That’s when he believes the shift started. The industry realized that product and service offerings could set them apart from the competition, and the race to offer more will continue, said Kaplan, as everyone seeks more efficiencies and omnichannel capabilities to keep up with customer demand.
Yet the marathon has grown tedious in another way: Everyone is trying to do everything pretty well, rather than choosing a few products and services to make great. Kaplan said even Sage was doing that for a while. When Kaplan became CEO in October 2017, he said the company had the bones of a competitive marketplace structure, but lacked a focus in terms of outstanding offerings.
Kaplan said that’s often a product of legacy ties. It was true for Sage: The technology powering its payments company was tied to technology powering everything else under the Sage umbrella. The corporate body was making all the calls. Because the corporate vision had little to do with payments, the payments company was forced into survival mode, fighting for every little resource.
Without dedicated growth, said Kaplan, technology, vision, focus and sales all fell flat or dropped.
Stage Two: Differentiation
That’s when the new chapter began. Sage Payment Solutions was acquired by private equity firm GTCR in August 2017, drawing it out from under the Sage Group plc umbrella and giving it room to (finally) grow in its own direction.
Sage Group is a global provider of integrated accounting, payroll and payment solutions. Sage Payment Solutions was specifically focused on integrating with merchants’ business management software to enable electronic payment acceptance in physical and digital environments.
Kaplan explained that the organizing framework for Paya is intended to take that to a whole new level – best-in-class technology with a focus on channel partner expansion and creating and building new ecosystem relationships centered on solving business problems.
“Paya’s more than payments and merchant services,” he said. “To be a payments company, processing payments is table stakes and not a differentiator. When you’re playing in the integrated worlds, the connected worlds … you have to be a trusted technology partner that provides business solutions and better customer experiences, delivering value and growth for today and for tomorrow.”
Stage Three: Growth
Kaplan said others in the space may or may not have gained this perspective, but even those who are trying to do more and be more can struggle if they’re constrained by old systems and technology, as legacy Sage Payments once was.
He considers Paya’s newfound independence one of its greatest advantages in the market, since it forced Paya to migrate off legacy systems and build a new technology stack from scratch. Starting over enabled Paya to gear the stack for tomorrow, Kaplan said, giving the company a competitive advantage to create freshness, simplicity and approachability.
Kaplan believes that Paya's product differentiation has come from workplace differentiation. He said that the company is deliberate about creating a work environment that “enables ordinary people to do extraordinary things” by cross-training employees and allowing and encouraging them to take risks. Providing transparency to all employees, he said, ensures that everyone in the company has the same vision and goals, and makes it possible to measure success.
That was the focus in 2017, as Paya was finding its feet as an independent company. Going into 2018 with a new brand name, vision and focus, the company is now in growth mode. With a scalable structure in place, and a company that is already 65 percent integrated, Kaplan said it’s time to start seizing additional opportunities to connect with independent software vendors (ISVs) and enterprise resource planning (ERP) organizations.
Kaplan said the goal is to create a self-fueling cycle in which customers take advantage of new opportunities from Paya to run their businesses better, then begin to turn to the company for other aspects of their business as well.